Academic journal article
By Flatt, Victor B.
The William and Mary Bill of Rights Journal , Vol. 15, No. 4
I. A LAW PROFESSOR AND BENEFTT-COST ANALYSIS
Benefit-cost analysis (or cost-benefit analysis) is a discipline that tries to ascertain the benefits and costs of a particular (usually public or governmental) action to ensure that government expends resources in the best and most efficient way possible.1 It is generally the province of economists, and an attempt to improve its use is often focused on the technical execution of the process itself.2 Many pages of analysis have been devoted to how benefit-cost analysis can more accurately predict or describe information, which we want to inform government policy. The use of benefit-cost analysis for policy purposes rests within the framework of policy itself, and in the United States, government policy is dictated by laws and the execution of those laws. Therefore, in all of the economic studies that look at the effectiveness or improvement of benefit-cost analysis, there is the underlying given that such a policy must be consistent with law. But neither law nor its interpretation is static. Nor in its broadest sense is law predictive or formulaic, though parts of it have been subject to mathematical analysis and much of its outcomes and goals can be explained by economic theory.3 Therefore, one part of any discussion of benefit-cost analysis must lie outside the realm of empirical data and instead reside in the realm of advocacy - wherein certain interpretations of the law are put forward as the "best" or correct ones because someone wishes the result that would come about from that interpretation.
In this Artide, I plan to enter that realm and provide reasoned arguments for why I think the law should be interpreted in a certain way. I will assert that an interpretation in this manner will provide a legal framework for benefit-cost analysis that I believe will move us further towards the result that provides information for the best overall policy decisions based on that information.
The first step in this advocacy is to explain how benefit-cost analysis in policy is related to law. A brief civics lesson would note that all laws of the United States government are to be made by Congress, with presidential input.4 Similar state constitutional doctrines underlie state lawmaking. Though many might wish our lawmakers to use a specific analytic process for lawmaking, the process of making law itself is not governed by benefit-cost analysis and is only limited by what powers and exercising of those powers are allowed by the Constitution.5 Although we may never know fully what decisions go into the making of actual law, even if on an individual basis legislators applied a rudimentary form of benefit-cost analysis, it would not necessarily be informed nor would its analysis necessarily encompass all of the persons that it would affect. Bismarck's remarks about the making of laws and sausages ring as true today as they did 100 years ago.6
According to certain theories of government and benefit-cost analysis, at least as meant in the utilitarian manner, such a procedure may not be consistent with appropriate government in any event.7 Instead, benefit-cost analysis as a discipline for government action is a part of the executive branch, the branch that is charged with administering the laws that are passed.8 Ideally, one would suppose that this means that whatever laws our legislators feel should govern our people, based on whatever theory of government, are the laws that should be administered in the best (i.e. most cost-beneficial) way possible.
Benefit-cost analysis in this way has become entrenched in our modern administrative nation-state.9 Since the early 1970s, every president of this country has issued an executive order requiring all agencies of the federal government to use benefit-cost analysis in agency action, unless prohibited by law from doing so.10 Moreover, the Unfunded Mandates Reform Act of 1995 requires a benefit-cost analysis of any agency action over $100 million, though it does not require the decision to be based on that analysis. …